Resilient Home Care & Beauty M&A

This year, small and medium-sized enterprises (SMEs) in the business-to-consumer (B2C) sector are emerging as strong performers in the mergers and acquisitions (M&A) market. This trend contrasts with the venture investment market, where significant capital continues to flow into artificial intelligence (AI) and deep tech companies. Amid an economic downturn, demand is rising for acquiring well-known, profitable “hidden gems” that maintain stable cash flows and offer strong synergy potential.

According to WMD, a specialized M&A advisory firm for SMEs and venture businesses, there were 27 M&A transactions involving SMEs between January and May 2025, based on publicly disclosed contracts in the KOSPI and KOSDAQ markets.

In terms of transaction value, companies in B2C sectors and traditional manufacturing industries dominated the top ranks. For example, Steward Partners acquired healthcare company Pulio earlier this year, becoming its largest shareholder. The deal, valued in the KRW 100 billion range, reflected Pulio’s strong performance, with 2024 revenue reaching KRW 190.5 billion—more than triple the previous year.

The largest deal took place in the cosmetics sector. Private equity firm KL & Partners acquired beauty brand Manyo Factory in May 2025. Its major shareholder, L&P Cosmetic, sold a 51.87% stake to K-Beauty Holdings, a special-purpose company established by KL & Partners for this acquisition.

Traditional manufacturing firms also attracted steady buyer interest. WWG Asset Management and Gi & Partners jointly invested KRW 80 billion to acquire Inochem, a producer of industrial adhesives. Established in 1984 as part of Inics, Inochem provides advanced adhesive solutions for industries including automotive, electric vehicles, and construction. In addition, LX Investment acquired waste-battery recycling company Savitchem, while EV Advanced Materials purchased SC Engineering, specializing in design, construction, and procurement.

By contrast, there were no significant M&A deals reported in the AI and deep tech sectors during the same period.

Industry experts predict intensifying competition for SMEs with strong profitability and brand recognition. A report by Samil PwC, titled “The Role of Private Equity in the Domestic SME M&A Market,” revealed that 43% of private equity-led M&A deals over the past three years involved SMEs, based on transaction value.

Companies that have already proven profitability and brand strength are now being valued at premium levels. For instance, Blackstone is reportedly pursuing the acquisition of premium hair salon franchise Juno Hair, valuing the company at around KRW 800 billion. Juno Group recorded revenue of KRW 300 billion and EBITDA of KRW 37 billion in 2024. Remarkably, this valuation represents more than 20 times its EBITDA, drawing significant attention.

Similarly, Clean Topia, the leading laundry franchise in Korea, has recently been put up for sale. JKL Partners acquired the company in 2021 for KRW 190 billion, but the current market price has reportedly soared to around KRW 500 billion in just four years.

Deputy CEO John of WMD commented:

“In recent years, the preference for SMEs with faster investment recovery cycles and steadily rising performance has grown significantly. Not only in Korea but also in Japan and overseas markets, interest in acquiring profitable SMEs is rapidly increasing. As a result, final sale prices are often far exceeding initial market expectations.”

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